The Department of Business, Innovation and Skills (BIS) has reaffirmed its plans to remove legislation that ensures the Green Investment Bank (GIB) is used to fund clean energy infrastructure as part of efforts to privatise the bank.
The sale of GIB into the private sector was announced in June by business secretary Sajid Javid, who said the plans would allow the bank greater freedom to borrow capital independently from government, and provide a return for taxpayers.
But the sale became problematic when discussions between BIS, the Office of National Statistics and HM Treasury found that even if it were no longer publically owned, legislation governing the GIB would still be classified as constituting government control, preventing it from being re-classified to the private sector.
In an effort to overcome this hurdle, Javid announced to the House of Commons that part one of the Enterprise and Regulatory Reform Act (ERRA) 2013 would be repealed. However, this legislation also tied the activities of GIB to the green agenda, committing it to investment in green projects.
Speaking in October, Javid added: “People will wish to be assured GIB will nevertheless continue to invest in green sectors as Parliament envisaged. I wish to make clear that the Government also wants and expects a privately owned GIB to continue this clear focus on green sectors – mobilising more private capital and further accelerating the transition to a green economy.”
A factsheet published today by BIS has confirmed that Clause 29 of the Enterprise Bill will repeal the majority of the ERRA 2013 following the sale of shares in GIB. There is no mention of any measures being used to ensure the GIB continues to be used only for green initiatives, leading to concerns that the bank’s original remit of investing in green infrastructure will be lost once it is sold.
Nick Mabey, chief executive of E3G, a think tank that advised on the original plans for a green bank, said: “Removing legal protection over the GIB’s green purposes is another blow to its green credentials. There would be no guarantee it will remain green however they dress it up. It sets the GIB on to a path of being just another bog-standard asset manager, destroying its ability to leverage in private investment. It is an economic own-goal.
The plans have already faced opposition from the House of Lords, with Liberal Democrat Lord Tevenson introducing an amendment to the Enterprise Bill to introduce “green guardians” charged with ensuring the objectives of the GIB remain pose-privatisation. These individuals would initially be appointed by the Committee on Climate Change, with replacements to members stepping down to be chosen by those remaining. They would act as a charitable company with a veto over whether or not the objectives of the GIB could be changed in future.
The amendment was passed by 258 votes to 212 and is to be considered in the House of Commons in 2016. The Government’s alternative – outlined in its policy statement on the future of the GIB – is to ask potential investors to confirm their commitment to GIB’s green values and investment principles and to set out how they propose to protect them.